A late surge in banking stocks, spurred by Cabinet decision on consolidation of public banks, pulled markets higher on Wednesday, as the Sensex closed up 276 points, in line with a firming global trend.
The broader Nifty ended on top of 9,800 again.
The government on Wednesday decided to set up an alternative mechanism to oversee proposals for consolidation of public sector banks (PSBs) with a view to creating fewer but stronger lenders.
State-run Punjab National Bank, Bank of Baroda, Allahabad Bank, Union Bank of India and Bank of India were at the centre of investors' attention, which recorded moderate to sizable gains.
The 30-share Sensex stayed in the positive zone all throughout and hit a high of 31,593.39 before settling up 276.16 points, or 0.88 per cent, at 31,568.01. The gauge had gained 33 points on Tuesday.
The 50-share. Nifty, too, rose 86.95 points, or 0.89 per cent, to close at 9,852.50 after scaling a high of 9,857.90. It hit a low of 9,786.75.
Infosys stock made a significant rally by climbing 1.98 per cent to Rs 894.50 on value-buying amid speculation that Nandan Nilekani might make a comeback as the company's head.
“The market suddenly spiked towards the last hour of trade, supported by renewed buying in beaten-down stocks. Banking stocks grabbed investors’ attention on account of the Cabinet nod to oversee PSU banks’ consolidation,” said Vinod Nair, Head of Research, Geojit Financial Services Ltd.
“Global market remains supportive ahead of Jackson Hole meeting tomorrow which may hold the market direction in the absence of major domestic cues.”
Adani Ports made it to the lead, surging 2.79 per cent at Rs 384.95, followed by Bharti Airtel. Dr Reddy's went up for the second day, this time 2.25 per cent.
In the realty space, DLF Ltd climbed 6.10 per cent to Rs 186 on the news that it will hold a board meet on August 25 to decide on promoters' proposal to sell their 40 per cent stake in its rental arm to investment firm GIC in a deal estimated at around Rs 13,000 crore.
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